Build-A-Bear Workshop 2009 Annual Report Download - page 29

BUILD-A-BEAR WORKSHOP, INC. 2009 FORM 10-K
As a result, the results of the share repurchase program may
not be as beneficial as we would like.
Our certificate of incorporation and bylaws and Delaware
law contain provisions that may prevent or frustrate attempts
to replace or remove our current management by our
stockholders, even if such replacement or removal may
be in our stockholders’ best interests.
Our basic corporate documents and Delaware law contain
provisions that might enable our management to resist a
takeover. These provisions:
• restrict various types of business combinations with
significant stockholders;
• provide for a classified board of directors;
• limit the right of stockholders to remove directors or
change the size of the board of directors;
• limit the right of stockholders to fill vacancies on the
board of directors;
• limit the right of stockholders to act by written consent
and to call a special meeting of stockholders or propose
other actions;
• require a higher percentage of stockholders than would
otherwise be required to amend, alter, change or repeal
our bylaws and certain provisions of our certificate of
incorporation; and
• authorize the issuance of preferred stock with any voting
rights, dividend rights, conversion privileges, redemption
rights and liquidation rights and other rights, preferences,
privileges, powers, qualifications, limitations or
restrictions as may be specified by our board of
directors.
These provisions may:
• discourage, delay or prevent a change in the control of
our company or a change in our management, even if
such change may be in the best interests of our
stockholders;
• adversely affect the voting power of holders of common
stock; and
• limit the price that investors might be willing to pay in the
future for shares of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES
STORES
As of January 2, 2010, we operated 291 retail stores located
primarily in major malls throughout the United States, Canada
and Puerto Rico, 50 stores located in the United Kingdom,
three stores in France and one store in Ireland. Our North
American mall-based stores generally range in size from
2,000 to 4,000 gross square feet and average approximately
2,800 square feet, while our tourist location stores currently
range up to 7,000 square feet and our flagship store in New
York City is approximately 20,000 square feet. Our stores
are highly visual and colorful featuring a teddy bear theme
and larger than life details including a “sentry bear” at the
front entry, custom-designed fixtures as well as a customized
Build-A-Bear Workshop tile logo in our entryway. Our stores
are designed to be open and inviting so that guests can fully
immerse in the shopping experience and actively participate
in the creation and customization of their purchase. Our
typical store features one or two stuffing machines, five Name
Me computer stations and numerous displays of fully-dressed
stuffed animals throughout the store. We select malls and
make site selections within the mall based upon demographic
analysis, market research, site visits and mall dynamics as
well as a proprietary forecasting model that projects a
potential location’s first year sales. We have identified
additional target sites that meet our criteria for new stores in
new and existing markets. We seek to locate our mall-based
stores in areas with maximum customer traffic, often near to or
in the center of the mall, as well as offering adjacencies to
other children, teen and family retailers. After we approve a
site, it typically takes approximately 26 weeks to finalize the
lease, design the layout, build out the site, hire and train
associates, and stock the store for opening.
We lease all of our store locations. Due to our attraction
as a family-oriented entertainment destination concept, we
have received numerous requests from mall owners and
developers to locate a Build-A-Bear Workshop store in their
malls. We believe that we generally have negotiated
favorable lease terms including provisions providing for
exclusivity of operation of our concept in the mall. Our stores
are located in a variety of shopping center types. As of
January 2, 2010, the distribution of our stores is as follows:
Super regional center 217
Regional center 81
Open air lifestyle center 23
Outlet center(1) 10
Other (theme, NYC, concession) 14
Total 345
(1) Build-A-Bear Workshop stores in outlet centers are not merchandised with
outlet merchandise.
Most of our leases have an initial term of ten years and
do not have renewal options or clauses although our leases
in the U.K. and France are typically covered by laws and
regulations that give us priority rights of renewal. A number
of our leases provide a lease termination or “kick out” option,
which may be mutual, allowing either party to exercise the
option in a pre-determined year or years, typically the third or
fourth year and sixth or seventh year of the lease, if we do not
meet certain agreed upon minimum sales levels. In addition,
our leases typically require us to pay personal property taxes,
our pro rata share of real property taxes of the shopping mall,
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